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Merchia v. United States

United States District Court, D. Massachusetts

June 17, 2019




         Pending before this court is a motion to amend the complaint filed by plaintiff Pankj Merchia (“plaintiff” or “Merchia”). Defendant United States of America (“defendant” or “United States”) opposes the motion. (Docket Entry # 42). After conducting a hearing on March 6, 2019, this court took the motion (Docket Entry # 35) under advisement.


         Merchia initiated this action on March 5, 2018 by filing a complaint against the United States for “taxes erroneously collected.” (Docket Entry # 1, p. 1). On December 31, 2018, Merchia moved to amend the complaint to add claims against individual agents of the Internal Revenue Service (“IRS”) for “willful[ly] withholding” his tax refund and for levying his bank accounts and placing liens on his property, despite knowing for more than four years that the IRS owed him a refund of over $4 million. (Docket Entry # 34, pp. 7-10). As best as can be discerned from the proposed pro se amended complaint, which is largely bereft of statutory citations, it includes claims against the United States, “Commissioner of the IRS” John Koskinen (“Koskinen”), “officer Alice Bucciero of IRS appeals” (“Bucciero”), “IRS revenue agent Mia Alonzo” (“Alonzo”), “IRS Examination Supervisor Teresa Peters” (“Peters”), and “at least 6 other unnamed IRS employees in their individual capacity” for: (1) reckless, intentional, or negligent disregard of IRS regulation 26 C.F.R. § 15a.453-1 in violation of 26 U.S.C. § 7433 (“section 7433”) (Count One);[1] (2) knowing or negligent failure to release a tax lien (Docket Entry # 34, p. 8), presumably in violation of 26 U.S.C. § 7432 (“section 7432”), which allows civil actions against the United States for failing “to release a lien” (Count Two); and (3) erroneous or illegal assessment and collection of taxes in violation of 26 U.S.C. § 7422 and 28 U.S.C. § 1346 (Count Three).[2] (Docket Entry # 34). The proposed amended complaint also sets out Bivens claims against the individual IRS employees (Count Four). (Docket Entry # 34).

         The United States seeks denial of the motion to amend the complaint because the proposed amended “complaint would not survive a motion to dismiss” and is therefore futile. (Docket Entry # 42, p. 1). It argues that the amendments are futile because they attempt to “assert a Bivens cause of action where an alternate statutory remedy exists” and because “plaintiff has not demonstrated that he complied with strict waivers of sovereign immunity regarding the proposed statutory causes of action.” (Docket Entry # 42, p. 7).


         “The court should freely give leave when justice so requires, ” Fed.R.Civ.P. 15(a)(2), but “[c]ourts may deny such leave to amend . . . if the amendment would be ‘futile.'” Sultaliev v. Rodriguez, 263 F.Supp.3d 352, 357 (D. Mass. 2017) (citing Palmer v. Champion Mortg., 465 F.3d 24, 30 (1st Cir. 2006)). An amendment is futile if the proposed “amended complaint ‘could not withstand a 12(b)(6) motion to dismiss.'” McMann v. Selene Fin. LP for Wilmington Sav. Fund Soc'y, FSB, 332 F.Supp.3d 481, 487 (D. Mass. 2018) (citation omitted); accord Rife v. One W. Bank, F.S.B., 873 F.3d 17, 21 (1st Cir. 2017) (“‘[f]utility' means that the complaint, as amended, would fail to state a claim upon which relief could be granted”) (internal citation omitted).

         To survive a Fed.R.Civ.P. 12(b)(6) (“Rule 12(b)(6)”) motion to dismiss, the complaint must include factual allegations that when taken as true demonstrate a plausible claim to relief even if actual proof of the facts is improbable. See Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555-58 (2007). Thus, while “not equivalent to a probability requirement, the plausibility standard asks for more than a sheer possibility that a defendant has acted unlawfully.” Boroian v. Mueller, 616 F.3d 60, 65 (1st Cir. 2010) (internal quotation marks and citation omitted). “[A]ccepting as true all well-pleaded facts in the complaint and making all reasonable inferences in the plaintiff's favor, ” id. at 64, the “factual allegations ‘must be enough to raise a right to relief above the speculative level.'” Gorelik v. Costin, 605 F.3d 118, 121 (1st Cir. 2010) (internal citation omitted).

         In assessing the futility of the proposed amended complaint, it is appropriate to consider the documents attached to the proposed complaint (Docket Entry ## 34-1 to 34-5), which form part of the proposed pleading. See Fed.R.Civ.P. 10(c). While “[c]ourts review pro se complaints according to ‘less stringent standards than formal pleadings drafted by lawyers' . . ., pro se status does not insulate [a] party from complying with substantive and procedural law.” Garrett v. Ill. Attorney Gen., Civil Action No. 14-10217-RWZ, 2014 WL 652614, at *2 (D. Mass. Feb. 18, 2014) (emphasis in original) (internal citations omitted).


         In January 2013, Merchia filed a tax return form 1040 for tax year 2012, listing as income money that was owed to him, but that he did not receive, in 2012. (Docket Entry # 34, pp. 2-3). In June 2014, having come to believe that he made a mistake listing this “‘evidence of indebtedness'” as income on his 2012 tax return, Merchia filed an amended tax return form 1040x requesting a refund based on excluding the foregoing amount of indebtedness. (Docket Entry # 34, pp. 2-3). IRS agent Alonzo audited Merchia's 2012 tax return. On October 1, 2015, she and Peters notified Merchia that the IRS “would continue to tax him in tax year 2012 on the ‘evidence of indebtedness, '” even though Alonzo and Peters informed Merchia on the same day that “they had no evidence supporting Plaintiff having received the funds.” (Docket Entry # 34, pp. 3-4).

         As indicated in an email, Merchia appealed the IRS' decision not to issue a refund. (Docket Entry # 34-2). On December 14, 2015, following a review of the record, IRS appeals officer Bucciero determined that Merchia had overpaid nearly $4.4 million in taxes for 2012 and subsequently sent him a settlement offer. (Docket Entry # 34, pp. 4-5). This offer would have reduced Merchia's taxes for 2012 by $4, 393, 724, but also assessed a penalty and “extra taxes” for 2009. (Docket Entry # 34, p. 5). Believing that the assessed penalty was unlawful, [3] Merchia rejected the settlement offer. (Docket Entry # 34, p. 6).

         On June 2, 2016, an unnamed “IRS Appeals Team Manager” sent Merchia a “Notice of Determination that provided no refund and continued to tax Plaintiff on funds that the IRS Appeals knew Plaintiff had not received.” (Docket Entry # 34, p. 6). Merchia has not received a refund for his 2012 taxes and “IRS officers continue[] to levy [his] bank accounts and place liens on his property.” (Docket Entry # 34, p. 8).

         The proposed amended complaint also alleges that IRS Commissioner John Koskinen (“Koskinen”) offered, and the “[d]efendant IRS employees” accepted, “bonuses as personal incentives effectively to maximize the taxes they collected or did not refund.” (Docket Entry # 34, p. 9) (emphasis omitted). In support of this allegation, plaintiff attaches a news article regarding “performance awards” given to “legal experts in ...

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